Rename Folder in Vista

I am running Vista Home Premium and just the last few weeks am not able to rename folders. I right click, select rename, apply new name and get a popup stating "The file or folder does not exist" The folder then reverts to "New Folder"

This does not happen with files which all rename Ok. I've rechecked that I have the correct authority but still will not rename. It's driving me up the wall as I now have at least 10 "New Folders"